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Mihir Pershad, founder and CEO, UMAMI Bioworks
Mihir Pershad: '‘This is a stock deal for us to acquire all of Shiok’s assets." Image credit: UMAMI Bioworks

Cultivated meat consolidation begins as UMAMI Bioworks to merge with Shiok Meats

March 12, 2024

Singapore-based cultivated seafood startups UMAMI Bioworks and Shiok Meats are in talks about a proposed merger in which UMAMI will acquire assets from Shiok to accelerate its scaleup plans and broaden its product pipeline.

The deal is likely the first of many in the nascent cultivated meat and seafood space given the challenging funding environment, said UMAMI founder and CEO Mihir Pershad, who will head up the newly unified company as CEO, with a board of directors that will include investors Hatch Blue and Aqua-Spark.

He told AgFunderNews: “We’ve been party to discussions on a few different opportunities of this sort, so I think we’ll see more consolidation in the industry. In this case, this is a stock deal for us to acquire all of Shiok’s assets.

“This made sense for us because UMAMI’s focus is on endangered species of fish that are not easily farmed sustainably [such as eel and grouper], so we saw a lot of strategic alignment with Shiok’s work on crustaceans such as shrimp, crab and lobster.

“This is an opportunity to expand our portfolio and acquire assets that will help us scale up our novel process more rapidly to 200-liter technical demonstration scale this year, because Shiok has already built some of the hardware we would need.”

He added: “I think Shiok [which has raised more than $30 million since 2018 from investors including Aqua-Spark] couldn’t see a clear path to raise the larger amount of capital that would be needed to hit the next phase, whereas our structure, because we’re b2b, is more asset light, and so that has given us a clearer path to move forward without needing that large raise everyone is struggling to get at the moment.”

‘There’s going to need to be a lot more capital invested to really scale this industry’

In general, said Pershad, “There’s going to need to be a lot more capital invested to really scale this industry, and you have to figure out where that’s coming from. From governments? From private equity? From traditional industry? For those players [big meat and seafood companies] there has to be a story that’s big enough, and offering a single product, single species, doesn’t fit the way most of them do business, so I think there’s opportunity here for us to build a broader platform spanning multiple species.”

There are a few other players looking at cultivated crustaceans including US-based Cultured Decadence (acquired by UPSIDE Foods in early 2022) and Korea-based CellMEAT, noted Pershad, “But crustaceans are a tough nut to crack. From our point of view, we don’t expect these [crustacean cell lines acquired from Shiok] to turn into products tomorrow, but I think it’s hard to talk about sustainable production of endangered seafood species without talking about crustaceans.”

Asked what assets UMAMI Bioworks will be acquiring, he said: “Some of the [Shiok] team is joining us so there’s a combination of know-how plus process IP around development of crustacean cell lines.”

Asked whether Shiok Meats’ cofounder and CEO Dr. Sandhya Sriram would be staying on at the new company (which will still be called UMAMI Bioworks), Pershad said: “Right now, she and I are working together on the transition and then in terms of what the full management team will look like, we will announce that once the deal is formally closed.”

Dr. Sriram—who penned a lengthy LinkedIn post last year outlining some of the challenges of running a startup in a completely new space—added: “I have always believed in consolidation to progress a novel industry like ours.”

‘We have the tech, but we have to partner with food companies’

Speaking to us in January after unveiling plans to build a cultivated meat facility in the Kulim Hi-Tech Park in Malaysia with Cell AgriTech, Pershad said: “I think a few years ago investors got caught up in the idea of a thing that seemed like it should exist, without necessarily building a philosophy about how it might come to exist in the world in a real way.

“It led to a lot of investments before they started picking up on things that were probably obvious from the start around capex issues and exit scenarios,” added Pershad, who has a variety of backers from Japanese seafood giant Maruha Nichiro to early stage VC investors such as Better Bite Ventures, but has also secured $2m+ in non-dilutive funding including a SIIRD [Singapore Israel Industrial R&D Foundation] grant with Israeli cultivated meat startup Steakholder Foods.

He added: “Our view is that startups cannot be in the capex business. Instead, we need to figure out where we can tap into expertise, capital and muscle from existing industry and use that to help us scale however we can.”

At UMAMI Bioworks, he said, “We have the tech, but we have to partner with food companies who generate a lot of cash that can be turned into capex investments in future production capacity. It’s also much easier for me to get traditional bank debt financing for a factory if there’s an offtake agreement from the biggest seafood company in the world behind it, or better, an operational agreement where they’re actually going to be running the factory, because that’s what they’re good at.

“We’re working with three or four very large food companies right now and our goal is that our customers are signing commitments to build factories.”

‘We believe we can do profitable production from 2,000-liter reactors for premium species’

As for the size and scale of facilities, bigger is not always better, he said, at least for the first wave of commercial-scale facilities. “We believe we can do profitable production from 2,000-liter reactors for premium species [such as eel and grouper], and we as we go to larger volumes, 10,000-liters makes sense.

As for metrics that investors sometimes ask about such as doubling times or cell density or differentiation efficiency, he said, “It all comes down to one number, which is dollars per kilogram per day, and eventually dollars per ton per day. It’s a cost and time-bound productivity metric. I can increase cell density, but if I have to use more expensive media to do it, then that may not be a tradeoff worth making, so you can’t look at any of these metrics in isolation.”

He added: “In our process, we can proliferate and differentiate cells fully in suspension. We are able to run pseudo-continuous manufacturing that allows us to get massive improvements in productivity versus a traditional fed batch approach.

“We’ll see what the regulators let us do but biologically, we’re capable of long process runs with many harvests, which means we can run smaller reactors, with less capex and much higher productivity per dollar of investment.”

For 100% cultivated products, he said, “I don’t see a path to scale in the near term, so we’re looking at hybrid products where we combine cultivated seafood and plant-based proteins, rather than starches or ingredients with no real nutritional value.”

‘We’re focusing on endangered species that cannot be commercially farmed’

UMAMI Bioworks, which uses mesenchymal stem cells that it triggers to differentiate into fat or muscle, is focusing on high-value endangered species that cannot be commercially farmed, including eel and grouper, “which goes for $50-60/kilo and up to $100/kilo at Chinese New Year,” said Pershad.

“The eel supply has cratered in the last 15 years; they have gone from at risk to critically endangered, and the same thing is starting to happen with other species. What nobody reports is that subsidies make half of all deep sea fish profitable, and that’s not sustainable. So at some point, it becomes a smart financial decision for [traditional] seafood companies to partner [with cultivated meat companies]. And that’s really our core thesis.”

The new facility in Malaysia

For UMAMI Bioworks, the goal is tech transfer, he said. “We’re basically delivering a plug and play factory in a box, so hardware, process, biology comes from us, and then the operational expertise and the management of the facility is the purview of Cell AgriTech.

“This project will be financed in a couple of ways, so some government support, some private investors plus some investment directly from CellAgriTech; we’re in the process of putting those pieces together, but the facility and the space have already been secured.”

In the first instance, he said, “We’re building a tech demonstration in Singapore that that will be operational in the next few months and will be up to 200 liters, allowing us to do dozens of kilograms per harvest. We’ll then have a single pilot line in Malaysia at a facility that is being provisioned in Penang. We expect the pilot line to be operational in Q1 2025, and the first full-scale line to be up in Q1 2026.”

As for the consumer drivers for cultivated fish, he said, “Right now, I’d say it’s not climate, and it won’t be price for a while. So we have to focus on other things, whether it’s shelf life, product quality, nutritional value, safety, and being free of heavy metals and microplastics.”

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